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Explaining choice of development strategies: suggestions from Mexico, 1970–1982

Published online by Cambridge University Press:  22 May 2009

David R. Mares
David R. Mares
Affiliation:
Assistant Professor of Political Science at the University of California, San Diego.
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Abstract

Economic development requires choices among a broad spectrum of alternative strategies and, as the recent experience of Mexico suggests, those choices are not easy. A complex politics is involved in the transition from one development strategy to another. The international political economy and domestic social coalitions both influence the costs and benefits associated with various development policies; they rule out some choices, but numerous options still remain. How can one explain actual outcomes? Observers may significantly increase their ability to explain outcomes by incorporating a statist component into their analyses. Within the very broad parameters set by the international political economy the state influences (but does not determine) the creation and the demands of the social coalition itself. In addition, the state may use policy instruments and advantages from the domestic and international arenas to implement policy even in the face of domestic opposition. The structure of the domestic political economy determines the space within which the statist perspective contributes to explanatory power. Eventually, it is in a historically based ideology that the chief explanation for the state's choice of policy and the construction of particular domestic coalitions is to be found.

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Articles
Information
International Organization , Volume 39 , Issue 4 , Autumn 1985 , pp. 667 - 697
Copyright
Copyright © The IO Foundation 1985

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36. The bias against agriculture tends to accompany all ISI strategies; cf. Johnston, Bruce F. and Clark, William C., Redesigning Rural Development (Baltimore: Johns Hopkins University Press, 1982), pp.70–115Google Scholar.

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40. The phrase is from Gourevitch, , “Breaking with Orthodoxy,” p. 98Google Scholar.

41. I thank Elan Bisberg for bringing this threat to my attention; the politics of the Echeverria period is analyzed at length in Mares, David R., “Agriculture and Dependent Development: Politics in an Evolving Enclave Economy” (Ph.D. diss., Harvard University, 1982)Google Scholar.

42. Ibid., chap. 4; Sanderson, Steven, Agrarian Populism and the Mexican State (Berkeley: University of California Press, 1981)Google Scholar.

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44. Financial authorities did fear capital flight if there was a devaluation in 1982. But there were other reasons as well for allowing a progressive overvaluation to occur. Increased inflation would follow a devaluation, at least in the short run. In addition, after two decades of exchangerate stability devaluation would be seen as a policy failure rather than policy tool. Finally, many of Mexico's exports would not respond to currency depreciation because they were denominated in dollars (e.g., minerals, coffee, petroleum).

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48. It is often assumed that an export emphasis requires wage repression. Although repression may initially be the case, export success can expand the economic pie, allowing wages to rise. Morawetz, , The Emperor's New Clothes, shows that wages in the Colombian textile industry were lower than in the East Asian (pp. 82–85)Google Scholar. And if our concern is with the quality of life, family income in Brazil in the late 1960s rose as more jobs became available because of the success of export policies.

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55. Comercio Exterior, April 1979, p. 398; September 1980, p. 949; and May 1980, p. 445.

56. Ibid., May 1980, p. 445.

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58. The chief organ of the industrial protectionists did not take an opposing stance on the opening of the economy until the very end of the GATT debate in 1980.

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64. Agreement: On Trade Matters between the United States of America and the United Mexican Stater, I am grateful to Gustavo del Castillo for providing me with a copy of the text.

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66. Freiden, “Third World Indebted Industrialization”; Cohen, Banks and the BOP.

67. Cf. Villarreal, , “Proteccionismo industrial,” pp. 32–46Google Scholar.

68. Confidential interviews, 1983 in the Foreign Ministry and 1985 with an ex-Cabinet member, Story maintains that the president in fact favored joining GATT when the debate began. My point is that he favored it in January, but by November circumstances seemed to allow him to avoid this external constraint on his and future presidents’ behavior.

69. There were two major justifications given for the SAM program of self-sufficiency. There were indications that this trade could be very expensive for Mexico: the industrial plan projected that if the current trend continued to 1990, 54% of petroleum revenues would have to be used for imports of basic foodstuffs, thereby leaving little to finance other projects in the economy. In addition, there was fear that supplies from the international market would be unavailable either for domestic political reasons (U.S. president Nixon embargoed the export of soybeans in the fight against inflation during 1973) or for foreign-policy concerns (the United States has historically attempted to use food aid as a tool of foreign policy).

70. Comercio Exterior, March 1981, p. 261.

71. Petroleum Intelligence Weekly, 6 July 1981, p. 4. The initial Mexican response was to fill its contracts with a greater mixture of heavier Maya crude (a 70–30 mix, up from 60–40) despite the protests of buyers. Ibid., 2 March 1981, pp. 11–12, and 23 March 1981, pp. 5–6.

72. “Recuento nacional,” Comercio Exterior, June 1981, pp. 613–14; August 1981, pp. 858–59; and September 1981, p. 984.

73. Ibid., August 1981, p. 861.

74. Ibid., June 1981, p. 615.

75. “La evolution reciente y las perspectivas de la economia mexicana,” Economia Mexicana 3:1981, p. 11.

76. Comercio Exterior, February 1978, p. 243; February 1979, p. 254; May 1980, p. 444; March 1981, p. 355; and April 1982, p. 475.

77. “La evolution…,” Economia Mexicana 3:1981, p. 11.

78. “Recuento national,” Comercio Exterior, October 1980, p. 1081; August 1981, p. 861; September 1981, p. 983; October 1981, pp. 1114–15; and November 1981, p. 1247.

79. In 1981 the Mexican WPI rose 24.5% while the U.S. PFP increased 9.2%. The Mexican Wholesale Price Index is from SPP, lO Anōos the U.S. Producer Finished Prices, not seasonally adjusted, are from the Federal Reserve Bulletin, April 1982, no. 68 Table 2.10, p. A46.

80. Green, Rosario, “México: crisis financiera y deuda externa,” Comercio Exterior, 02 1983, p. 105Google Scholar.

81. SPP, , “Exposici6n de motivos de la Iniciativa de Decreto del presupuesto de Egresos de la Federación para el anò de 1982 (fragmentos),” Comercio Exterior, 02 1982, pp. 191–97Google Scholar.

82. Solís, Economic Policy Reform.

83. This is one of the chief failings of a recent attempt to examine the importance of domestic politics in Mexican foreign economic policy. Story, “Trade Politics in Third World,” uses Mexico's rejection of GATT membership to argue the importance of bureaucratic and interestgroup politics. A closer look at trade policy and not just the GATT decision, which was only one part of it, albeit an important one, demonstrates the probems of transferring a model derived from a pluralist political system to one characterized by an authoritarian-corporatist structure. If the national debate on the GATT was to be the key element in the president's decision, it would have marked the first time in Mexico's history that policy was determined by the uncontrolled articulation of societal interests. In the general area of trade policy one could also ask, if protectionist and nationalist forces were so strong, why was significant rationalization/liberalization possible in 1977–1979? With respect to the GATT case itself, despite detailed investigation of the positions of various social and bureaucratic forces, Story is never able to demonstrate their impact on the actual decision. (The vote in the Cabinet is insufficient. The 5–3 vote was negative only because the president had replaced a liberal foreign minister with a nationalist one. Also, Cabinet votes have rarely determined major decisions; if a vote had been taken, the banks would probably not have been nationalized in 1982.) In fact, Story's evidence that López Portillo favored GATT entry in November 1979 is weak. He assumes on the basis of facial expressions and cryptic remarks that Lopez Portillo's previously favorable stance did not change.

84. This is the argument of Little et al., Industry and Trade, for the advanced Third World countries they studied.

85. Soíls, , Economic Policy Reform, p. 29Google Scholar.